New Focus of Economic Survey 2024-25
A New Focus for India’s Economic Future
As India prepares for the Economic Survey 2024-25, Chief Economic Advisor V Anantha Nageswaran has revealed that deregulation will be a central theme of the upcoming survey. The CEA believes that strategic deregulation across key sectors will help streamline business processes, foster economic growth, and improve the ease of doing business in India.
With the growth forecast of 6.5-7% for FY25, Nageswaran believes India is well-positioned for growth, but it will require targeted reforms in workforce dynamics and wage structures to achieve this. He emphasized that addressing wage stagnation is crucial to pushing consumption and savings growth, which are integral to maintaining the country’s momentum.
Workforce Informalization: A Challenge to Growth
Nageswaran pointed out that post-pandemic, there has been a shift toward a more contractual workforce. This “creeping informalization” has led to stagnant wage growth, which has not kept pace with inflation. As a result, consumer spending has been restrained, and this, in turn, has affected economic growth.
The CEA underscored the need for companies to rethink their hiring practices and ensure fair wages, which would help in boosting consumer demand and stabilizing the economy. Addressing these concerns will ensure that India’s growth remains on track, with a focus on long-term sustainability.
Wage Reforms: A Pillar for Consumption and Growth
To foster a thriving economy, Nageswaran recommended correcting the wage structures to align with the cost of living. Higher wages would directly contribute to higher disposable income, driving consumer demand. This would not only improve household savings but also ensure a more robust economic environment.
The CEA stressed that wage growth must keep up with inflation to prevent economic stagnation and ensure long-term growth and stability in India.
Unlocking Potential: Deregulation and Reforms
India’s economic growth for FY25 largely depends on how effectively deregulation and workforce reforms are implemented. By simplifying regulatory frameworks, India can make it easier for businesses to thrive, attract foreign investments, and increase domestic consumption. This combination of deregulation and workforce reforms can provide the push needed to achieve the growth forecast of 6.5-7%.
India’s economy is poised for a promising future if these structural changes are made, setting the stage for higher economic activity, investment, and consumer spending.
Key Recommendations by CEA V Anantha Nageswaran
- Streamline regulations through deregulation to promote business growth.
- Address wage stagnation to enhance consumer spending and savings.
- Encourage companies to shift towards better wage practices and reconsider hiring trends.
- Focus on structural reforms to maintain economic growth and stability.
